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garilou
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« Reply #5 on: June 06, 2008, 07:43:52 AM » |
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You wrote: "The only real important thing is the return % at the end of the year."I could not totally disagree. But he absolute value is very important too! In the moment I have a 25% gain on a stock, which gives only a $300 gain, and I just covered a short with a 6% loss, which was only a $40.00 loss.
OK, I can't tell you what my % return is for the year. For different reasons, including the fact that the year is not over, and that the previous year I cared much more about the sickness of my husband who died last July...
I'll give you just an example, with one US stock.
Let me first say that I do not have a huge fortune, especially in my US account.
At least 70% of my total portfolio is very conservatively invested, and doesn't bring more then 5 to 6 % in a best case scenario.
OK, so I can't own too many stocks at a time, because most good American stocks are expensive, and I don't like to buy 14 or 32 shares :-)
So I constantly have to choose: which one seems more promising: I can't let one "sleep" and buy other ones at the same time. Most of the times, if I want to buy a stock, I must first decide which other one I'll sell. I'll usually sell one where I have a loss, (and try to find one at about the same price that seems more promising) or cash in a acceptable gain.
So this example shows how I did in this case.
I annotated a chart with letters: hope this chart will go through into the forum as an attachment.
I started "playing" in the stocks markets much earlier then my husband, (for a long time he stayed in the mutual funds.) But when he started he "got it" quickly, without learning anything. He was so much faster and efficient then I was. He followed his stocks on an Internet based portfolio, but did not like the types of alerts he could receive, so he just asked me for a little spread sheet where he could know exactly when his highest price on a single stock went down 3% and sold immediately, whether it was a gain or a loss.
With this system, he started making pretty good wins very fast. He died abruptly in July, after a long hospitalization, but when he came out of the hospital, he was so proud with the gains he had made while in the hospital (and it was not a little thing: a stem cell transplant!)
He did not died from his cancer, he was supposed to have another 2 years before his aggressive cancer would come back... if the transplant worked, which it did at least we thought.
A week after, (July 21), he was gone in a few seconds with a heart attack.
And 2 or 3 days after, all markets crushed if you remember. At least he did not see that!
But probably the losses would have been less then they have been because I could not touch anything for months, before all the transfers where done, and ... ouf!!! I was so sad because I was still unable to consider that money as mine, I still fellt it was his,
Sorry. I still have problems not talking about him here and then...we loved each other so much!
Back to my stock. I had decided to do like he did and not let go a acceptable gain in hope of an hypothetical bigger one.
When I received a recommendation for that stock (Copart CPRT), I looked at it, and I bought 200 with the intent to buy another 100 if it went up, because as you can see on the chart, it was still in its "trading period".
So B1, first Buy: 200 at 29.40. Did not expect the big jump that happened a few days after.
I was not used to such a fast rise, except sometimes for penny stock but I have long stopped playing with penny stocks, because they not only also drop very fast but worst of all, they often disappear totally.
I sold at point S1, and seemingly, lots of other people did the same as me, because the stock went sharply down right after.
The point that I marked with a X (end of November) is a moment when technically (and with 20-20 hindsight) I should have bought it again, but I was doing well with 2 other stocks, and did not.
I went back in at point B2 at $40.80, but this time I had enough cash to buy 300. Quickly I felt I did not like the curve to much, and that I should be happy with the good "equivalent per year percentage" gain that I had. So at point S2, I sold at 42. It was not a huge % gain, but OK for me.
Then there is a mark "?No" (end of February begin of March) a moment when I seriously thought about jumping in again, but did not. By mere luck because I could really not expect the bid drop that happened just after: on that day, my 3% system would not have worked.
I started shorting other things,(it was the ideal time if you can remember the markets at that time) and got back in at point B3, at 40.30, but this time I could buy 500 shares. I'm still riding.
How much is this in % ? Hard to say, because the money I made (including some losses, I'm not trying to pretend that I have only gains!), in absolute dollars is much higher then that what I would have made with my 200, eventually 300 shares, if I had waited and gone through the dips. Since I am a little maniac, I follow my portfolio on a huge spread sheet, and all I can say is that I am with my US portfolio, (so excluding the low return of the conservative items and the Canadian shorts that I cash and use for my bread and butter), exactly 11.7% higher then the S&P, since January 3rd 2008, so in around half a year.
So yes the percentage is probably important. What I meant was: not necessarily the percentage on one stock, but on the whole. Had I just sat on my 200 stocks bought at 29.40, I would now have a nice 63% gain on one stock, (which was not so predictable in that volatile market) but only 3,680.00$, not yet realized.
While playing around and shorting I've made "only 8.7%" (including realized and not realized gains and losses), but in absolute $ realized gains over 4,500$ (22% more then the not realized 3680.00). Considering my small start capital in my US account (where I always keep at least 25% cash in case I'd need the money, I am NOT Warren Buffet,) I'm happy, but do not pretend to be a champion, not at all!
You asked a short question and received a long answer! Did you expect simply a x.x% answer? Sorry about that.
Oh... and what is yours?
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